State LLC Fees: Everything You Need to Know
State LLC fees typically include registration fees and service fees. Ongoing fees include reporting fees and franchise taxes. Fees vary from state to state.3 min read
State LLC fees typically include registration fees, state filing fees, and service fees. Ongoing fees — usually due every year — include reporting fees and franchise taxes. These fees vary from state to state.
LLC Formation Costs
When you form an LLC, expect to pay fees for the following:
- State filing: You must file Articles of Organization with your Secretary of State office. Each state has its own filing fees, so your cost is determined by the state in which you file. Normally, LLC filing fees range from $50 - $800.
- Business name registration: You'll reserve an LLC name with your Secretary of State. Most states conduct a business name search to see if the name is already in use. Your registration won't be accepted if your LLC name is already registered by another business. You'll then have to refile for another name and pay another filing fee, so it's best to check the availability of an LLC name before you submit your filing.
- Services: Along with filing fees, you might opt to pay for services from a legal professional to help form your business. It can cost anywhere from $490 to $790 to have a business lawyer do the work for you, depending on the number of owners your LLC has as well as its complexity.
There are also some ongoing fees you'll have to pay to keep your LLC up and running. You have less paperwork compared to a corporation, but you must still pay annual filing fees to the state. These fees can be high, depending on your jurisdiction. Your state can change the fees any time, and some increase fees in order to raise more money.
Common ongoing costs include the following:
- Franchise tax: Your business profits won't be taxed directly in most cases, but some states impose a yearly flat tax on all LLCs. It ranges from a relatively low $250 in Delaware to the pricier $800 (minimum) in California.
- Reporting fees: Most states require you to pay annual fees, or reporting fees, in order to keep your LLC running. In a state like New York, fees increase based on the number of partners your LLC has, and range from $325 to a max of $10,000. The reporting fee in other states can be much lower, with some being as low as $20. Reporting fees are on top of franchise taxes.
- Time and effort: While the amount of time and attention you'll put into your business can't be calculated in monetary terms, this isn't at all a negligible amount.
If you fail to stay compliant with your state's LLC requirements, you may find that you don't have the asset protection you need when it's most important.
LLC Fees by State
The filing fee to register your LLC is a one-time fee, while the annual fee is ongoing and paid to keep your business in compliance and good standing with the state. You typically pay an annual fee every one or two years, and it's a requirement, regardless of your business's activity or income. Whether you pay every year or every two years depends on your state.
If you fail to pay your annual fee, most states can shut down, or dissolve, your business. The average annual fee is $101.
While most states call their yearly report an “annual report,” it may be known by other terms, such as the following:
- Annual registration fee
- Annual certificate
- Periodic report
- Franchise tax report
- Biennial statement
- Business privilege tax return
While it may seem like a good idea to form your LLC in a state that has lower fees, this isn't always the best way to go about it. In the long run, it could actually cost you more money. You might end up doing business in your state illegally and then having to register two LLCs — one domestic, for your home state, and one foreign, for the outside state.
It's very important to stay current with your business's fees to avoid costly penalties and the possibility of having your business dissolved. You might consider having one person in your business (or your registered agent) keep track of a fee schedule so your LLC remains compliant.
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